#LEND360 ● LEND360.org

Kirk Chartier Enova International, Inc.

 

online lending trends &

consumer driven innovation

Kirk Chartier

things are

for U.S. consumers

looking up  

77.5

84.6 87.2

2013 2014 2015 Source: “Surveys of Consumers,” University of Michigan, Aug. 2015

The Index of Consumer Sentiment

Inde

x of

% o

f G

ivin

g Fa

vora

ble

vs U

nfav

orab

le

U.S. FICO Score Distribution Over Time

Source: http://www.fico.com/en/blogs

2%

7%

12%

17%

22%

300 - 499

500 - 549

550 - 599

600 - 649

650 - 699

700 - 749

750 - 799

800 - 950

2012 2013 2014

% o

f Ad

ult

Popu

latio

n

Civilian Employment – Population Ratio

Source: US. Bureau of Labor Statistics, Civilian Employment-Population Ratio, Federal Reserve Bank of St. Louis, October 9, 2015

The Real Presidential Candidates of Pennsylvania Avenue

people like

the online model  

Source: U.S. Census Bureau, 2013 American Community Survey

Percentage of Households With Computers and Internet Use 2013

48.4

69.0

84.9

92.7

94.9

62.4

81.1

92.6

97.1

98.1

Less than

$25,000 to

$50,000 to

$100,000 to

$150,000 and

Computer Ownership

Source: eMarketer

U.S. Smartphone Penetration 2010 to 2017

20.2 29.8 38.7 44.3 50.1 55.4 59.8 63.5

% o

f Ad

ult

Popu

latio

n

Source: : idScan.net

Magical Mobile Devices

Source: “Banks Not Meeting Mobile Banking Customer Expectations,” February 7, 2013, The Financial Brand

Functions Desired by Consumers in a Banking App

54% Send notice of irregular account activity or changes

51% Make a payment on a loan or a bill

46% Sending notice of a low balance

44% Transferring money to accounts outside of my account

43% Deposit a check from a mobile device

41% Sending automated bill pay reminders

Source: “Cash Continues to Play a Key Role in Consumer Spending,” Bennett, O’Brien, Advincula, Federal Reserve System’s Cash Product Office, Apr. 2014

Payment Use by Household Income 2014

Aver

age

Num

ber

of P

aym

ents

per

Mon

th

focus on the right consumers

use a structured approach

filter your findings

focus on consumer needs, not features

take a second, and third, look

consumer driven innovation

the rich are

getting richer  

Servicing the growth in Prime and SuperPrime consumers

Source: “Online Lenders Rely on Old-School Marketing,” Rudegeair, Wall Street Journal, Oct. 1, 2015

“Thanks in large part to online lenders, the average monthly volume of personal-loan offers sent through the mail has more than doubled in two years to 156 million in the year through July from 73 million in the same period in 2013. In July alone, LendingClub mailed 33.9 million personal-loan offers, more than double the amount during the same month in 2014,”

what about

NonPrime America?  

Source: : Leo J. Shapiro, Nov, 2014 & CFSI 2012 Average SDC Consumer Rating of Importance in selecting product

Most Important Factors in Small Dollar Credit Lender Choice

Feat

ures

(%

in T

op 2

Box

Res

pons

e)

Source: “Designing High-Quality Credit,” CFSI, Sep. 2015

Touch-based Design for “Flexibility” and “Loan Amount”

Conversion Rate of Applicants Who Viewed Contract

Did not receive payment slider

71.0%

Received payment slider 86.2% Did not use slider to change payment amount

85.7%

Used slider to change payment amount

87.2%

Total 77.5%

Algorithmic Underwriting

“Credit-based insurance scores may benefit consumers overall. Scores may permit insurance companies to evaluate risk with greater accuracy, which may make them more willing to offer insurance to higher-risk consumers. Scores also may make the process of granting and pricing insurance quicker and cheaper, cost savings that may be passed on to consumers in the form of lower premiums.”

- Federal Trade Commission

Source: “Credit-based Insurance Scores: Impacts on Consumers of Automobile Insurance ,” FTC, Jul. 2007

Automated Data Feeds Analytics Engine with Secure Data

Transaction Analysis Used To Increase Likelihood of Approval

Base Underwriting

Secondary Underwriting

Improved Offer

Social Media or Geo Data for Additional Verification

Facebook, Twitter, LinkedIn, Yelp (for business) ID Verification score

“Social Proof” Models

LinkedIn, Yelp, Google Places Verification scores for employee and employer

Employment / Business Validation

Source: CFPB Factsheet on Outline of Proposals Under Consideration, March 26, 2015

CFPB Outline of Proposals Under Consideration

consumers restricted to three or less loans in a row

consumers restricted to 90 days or less of borrowing a year and generally 60 day with no loan after a covered loan

consumers must submit documents to verify application information

lenders discouraged from allowing consumers to use pre-authorized electronic

payments

lenders discouraged from lending to nonprime consumers whose credit risk would result in rates above 36%

Multiple Product Offerings

Outsourced Services